I first saw this video on the Facebook page of a friend I consider to be wildly apolitical. Now it's been seen 3.5 million times, and been written up by Ezra Klein, Andrew Sullivan, The Atlantic...that's right, a video about wealth inequality has gone viral.
We'vebeentalkingaboutwealthinequalityforyears, so it's really exciting to see someone else reframe information that's been out there and use new methods to drive the attention of the public to a critical issue. There are a variety of responses that are provoked by watching the video. What I would emphasize to first time viewers is that, yes, this is a problem. Not just because wealth inequality exists, or because Americans have inaccurate assumptions about it, but because it has meaningful, negative impacts on our society, most notably as it pertains to opportunity and economic mobility. As Ezra writes,
Take social mobility. A family might be doing fine on the income scale but still living hand-to-mouth, with little left over to pay for the child’s SAT prep or college tuition. A family with wealth, on the other hand, can always liquidate some assets to invest in their child’s future, and they can do so without worrying that they won’t be able to pay next month’s mortgage.
Next, we can do something about it. Derek Thompson worries that bad solutions, like income caps, are a tempting response. That's sensible, especially in a globalized context. But what then?
Stop making things worse. Our tax system promotes wealth building in ways that reinforce the existing gaps in wealth. Let me rephrase that, our tax code (through overreliance on taxexpenditures) makes wealth building easy for people that are wealthy and really hard for people that aren't. How about a Hippocratic approach for starters?
Discourage unhelpful behavior. I won't claim expertise on ways to address the "top heaviness" of wealth inequality. But I've seen a number of seemingly promising proposals that revolve around using the tax code to reward good behavior and discourage the bad. The economist Robert Frank gave a very interesting talk here in 2011 and argued for a progressive consumption tax to help discourage unsustainable spending patterns and reward investment for ordinary Americans. US Senator Tom Harkin has a proposal for a Financial Transactions Tax that could raise $35 billion/year without substantially impacting middle-class investors. Those are examples of the kind of ideas that could help to curb excess at the very top and provide revenue to launch new initiatives to help those at the bottom.
Broaden opportunity. Beyond avoiding harm and properly incenting behavior, government needs to promote new pathways to wealth building for low- and middle-income Americans. Eliminate policies that essentially prevent recipients of public assistance from saving. Create a universal, progressively matched system of children's savings accounts. Automate access to wealth building retirement accounts, reform the tax code to promote financial security and investment for the bottom 60% of the nation.
Stop making things worse. Discourage unhelpful behavior. Broaden opportunity. Profit.
No, it's probably not that easy, but there are things that can be done. Might tax reform be an opportunity to make progress on that kind of an agenda? Maybe so, and maybe years from now we'll look back and say that a YouTube video helped pave the way for progress.
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